Capital Gains Tax Misfiled | Tribunal Directs AO to Revise Assessment Following Property Sale Error

Case Details: Shrikant Ghanshyam Shah v. Int. Tax Ward - [2023] 152 taxmann.com 547

Judiciary and Counsel Details

• • Sandeep Singh Karhail, Judicial Member & S. Rifaur Rahman, Accountant Member
  • Bhupendra Shah for the Appellant.
  • Soumendu Kumar Dash for the Respondent.

Facts of the Case

Assessee filed its return of income by declaring total income including capital gains arising from sale of immovable property. Subsequently, the Assessing Officer (AO) received information that assessee sold two immovable properties during the year under consideration but offered capital gain tax on one immovable property.

Accordingly, notice under section 148 was issued. In response to the above notices, assessee had stated that due to some error while submitting the return of income, one of the property sold by the assessee was declared in his wife’s return and all the relevant taxes were paid in her account.

After considering the submissions of the assessee, AO rejected the submissions made by the assessee and proceeded to make the addition in the hand of the assessee.

Aggrieved by the order, assessee filed objections before Dispute Resolution Panel (DRP) but all in vain. Subsequently, an appeal was filed to Mumbai Tribunal.

ITAT Held

The Tribunal held that due to a mistake, assessee did not declare one transaction involving capital gain on sale of the property which was in the name of the assessee. It was declared in return of assessee’s wife and taxes were duly paid. Further, it was noted that both the assessee as well as assessee’s wife were falling under the same tax bracket.

It is a peculiar case wherein the income was declared and rightfully paid the tax thereon but in the hands of the wrong person. In order to do the right thing assessee has to revise his return of income at the same time even the wife of the assessee has to revise her return of income. Considering that the issue involved was related to A.Y. 2013-14, it was not possible at this point of time to do so.

Since the assessee has brought on record that the assessee’s wife paid the relevant tax in her return of income, it shows that even though by mistake the assessee has remitted the relevant tax on this transaction. The same transaction cannot be charged to tax twice.

Therefore, the AO was directed to intimate the AO of assessee’s wife to revise the assessment and initiate the refund along with interest till date. AO to initiate the recovery of demand arising out of the assessment from assessee.

AO to make sure that there should not be any burden on the assessee in collecting the due tax along with interest considering the fact that the relevant taxes were already paid by the assessee’s wife properly on time. Therefore, there was absolutely no loss to the revenue in this case.